Egyptian importers are finding it increasingly difficult to raise letters of credit (L/Cs) for fuel imports.

According to local sources, L/Cs are either very much more expensive than they were or unobtainable.

Lack of stability

Foreign banks and traders are making credit hard to come by or charging high premiums due to concerns over Egypt's political and financial stability, according to local bankers.

They say that since the election of new Islamist President Mohamed Mursi in June 2012, the number of oil traders in the market has shrunk as they struggle to secure L/Cs from banks.

One trader told local media that since the new president was installed, banks have raised the costs of L/Cs supplying the state-owned Egyptian General Petroleum Corporation.

Further concerns

There are fears that any substantial reduction in the international financial support that has so far been forthcoming since the 2011 overthrow of President Hosni Mubarak could worsen the fuel supply situation still further.

Without such interventions, traders say that Egypt could finish up like debt-stricken Greece, dependent on a narrow pool of traders charging huge premiums for fuel supplies.

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